Thus far, credit unions have been slower than banks to provide tools for bill payment, point-of-sale (POS) and online purchases, and person-to-person (p2P) payments on mobile and tablet devices, according to “Enter the Mobile Payments Era: Payments Breakthrough Provides Opportunities for CUs.”

Only 16% of federally insured credit unions reported offering mobile banking to their members at the end of the first quarter in 2012, NCUA reports. Meanwhile, 73% of the top 100 U.S. banks were on board with mobile by September 2011.

Other players include telecommunications firms and other high-tech companies.

All indications point to a looming explosion in the use of these options in coming years. Mobile POS payments, for instance, are predicted to surge 283% by 2017, to $1.4 billion from $365 million in 2012, so it’s imperative to get into the game.

Some experts predict mobile payments will supplant both cash and traditional plastic cards.

“People are on smart phones all the time,” says Matt Hodson, marketing director for $70.3 million asset Health Care Credit Union in Salt Lake City, which rolled out its first mobile services offering last fall. “It’s how people will pay in the future.”

This is particularly true for young adults, especially with the advent of near-field communication. We’re entering the era of the digital wallet, and for younger consumers that will become their only point of reference.

A youth movement

The Federal Reserve observes that 80% of mobile banking users are under age 45. Meanwhile, the average age of credit union members is 47—10 years higher than the U.S. median, CUNA reports.

Offering mobile services is key to closing that gap. And older members also are likely to appreciate the convenience of mobile services, which will aid retention.

Serving the underbanked

Higher-income individuals are the heaviest users of mobile banking, according to a 2012 Federal Reserve report.

However, people and businesses with limited access to financial services—a group comprised of more than one in four households, according to the Federal Deposit Insurance Corp.—make comparatively heavy use of mobile services.

Some 29% have used mobile banking and 17% having made mobile payments in the last 12 months, according to the Fed.

Boon for small businesses

Amid the recession, from mid-2009 through 2011, companies with fewer than 499 employees accounted for 69% of net new jobs. Outfits such as Newtek, The Small Business Authority, a CUNA strategic alliance partner, have created e-commerce platforms catering to these small businesses that credit unions can make available to their members.

Many credit unions have already reaped the rewards of mobile services. University Federal Credit Union (www.ufcu.org) in Austin, Texas, achieved a 25% adoption rate in its first year, and is processing $2 million in mobile deposits per month.

NCUA calls the mobile platform “a great way for credit unions to expand relationships with current members” and maintains that “credit unions need to use these technologies to engage the next generation of consumer.”

The agency acknowledges the increased risk exposure and cost considerations, “but the question may soon become whether credit unions can afford not to embrace the technological innovations revolutionizing the financial industry.”